Buying Vs Renting: What Side Of The Debate Are You On?


The buying vs renting debit has gone on for longer than I can remember, but each side has its own merits. If for nothing else, each has its place in the housing market. There are those that are currently better off renting, and there are those that are certainly better off buying. It’s worth noting, however, that the ultimate goal should skew towards homeownership. The buying vs renting debate cannily hold water for so long. The benefits of homeownership are simply to great to ignore, but I digress. Not everyone is ready to take the leap, nor should they be expected to. At the very least, owing a home takes a lot of work and money. And therein lies the root of the debate: time and money.

If you are — more or less — convinced that you want to make the leap into homeownership, but aren’t sure whether you are ready or not, you must take a look at your current situation through an unbiased lens. I recommend asking yourself a series of questions to help make things a little easier.

Buying Vs Renting: Are You Ready To Make A Choice?

Benefits of homeownership

When confronted with the buying vs renting conundrum, it’s best to ask yourself the following:

Does it make sense to buy?

A simple question, but nonetheless important. This simple inquiry can’t be underestimated. It must make perfect sense for an individual to consider buying a home. If it doesn’t make sense, we shouldn’t even be having this conversation. That said, you must be absolutely certain that buying a home makes sense for your particular situation. Are you in a spot where you can expect steady income for the duration of a mortgage? Are you going to be able to keep up with monthly mortgage obligations while simultaneously setting aside some cash reserves? Are you ready for the responsibility that coincides with homeownership? These questions, and many more just like them, must be answered before you even start shopping around for your dream house. At the very least, it must make sense to buy a home; anything less than complete conviction leaves room for error.

If money is your primary concern, you may want to pay special considerations to what we in the business refer to as the breakeven horizon. In other words, how many years will it take before the cost of buying equals the cost of renting? Those that plan on staying in the home past the breakeven horizon would be wise to buy, from a financial point of view. Anything less, and you may find renting to be the cheaper alternative.

Are you financially ready for what’s in store?

There is no way around it: buying a house requires a lot of money. Existing- home sales, on average, reached upwards of $253,500 as recently as August of this year. And while homeowners in San Francisco and New York are more than envious of the national average, it’s nothing to scoff at. $253,500 is a lot of money, even if you are paying it off over the course of 15 to 30 years. It’s worth noting, however, that the cost of homeownership doesn’t end at the purchase price; it extends to nearly every aspect of your life. While the average home may cost a quarter of a million dollars, living in them will significantly add to the cost.

In addition to the down payment and monthly mortgage obligation, homeowners need to consider everything from the cost of utilities down to everyday living expenses.

As a general rule of thumb, homeowners should not pay more than 28 percent of their income before taxes to their mortgage obligations. If you find that your monthly mortgage will exceed this threshold, you may want to hold of buying a home until you are making more money on a regular basis. Those that neglect this rule could find out the hard way that homes are not a cheap endeavor. So if you want to pick a horse in the buying vs renting race, make sure your income is reliable and sufficient. Obvious, yes — but nonetheless important.

Are you ready to put in the work?

When pitting buying vs renting, there are several differences to take into consideration, but few people underestimate just how different the time commitment actually is. At the very least, owning a home will demand more of your time. Whether it’s tending to the yard, painting the exterior or replacing a window, homeownership has become ubiquitous with more work than its rental counterpart. The tasks homeowners will have to take on include (but are not limited to) the following:

  • Address minor plumbing issues
  • Change light fixtures
  • Replace furnace filter
  • Clean rain gutters
  • Check smoke alarms and carbon monoxide detectors
  • Familiarize yourself with the breaker
  • Hang shelves
  • Paint rooms

Most rental properties enlist the services of a third part property manager; one that is typically tasked with hiring maintenance professionals to take care of the property. In other words, renters don’t usually need to address any maintenance issues on their own; the property owner will do it for them. Homeowners, on the other hand, don’t have the same luxury. If you own a home, it’s your responsibility to take cafe of any issues that arise. Whether it’s hiring a professional or doing it yourself, you alone are responsible for what takes place at your property.

If you already own a home, you know how much time it will require to keep it running efficiently. If you currently rent, you may be surprised at the sheer volume of things that need to be addressed on a daily bases. With that in mind, make sure you are ready for the commitment, because it’s a big one.

And The Winner Is

I maintain that there is an easy winner in the buying vs renting argument: homeownership. Don’t get me wrong, renting certainly has its place, especially in a market as expensive and competitive as today’s, but the benefits of homeownership are too great to ignore. Namely, those that own are building equity in an asset, instead of throwing money away every month on rent. What’s more, owning real estate serves as a great tax shelter; it can essentially make you money by saving you money.

When all is said and done, I believe owning trumps renting, but you need to be able to make that decision for yourself. Everyone’s situation is different, and what works for one person may not be optimal for someone else.

Key Takeaways

  • The buying vs renting debate has gone on for decades, but there is a clear winner in my opinion: homeownership.
  • The benefits of homeownership are far too great to ignore, and I would be remised if I didn’t let others know.
  • While you won’t find a greater proponent of homeownership than myself, that’s not to say it’s the easiest road to travel. Though extremely beneficial, owning a home requires more time, money and effort than renting.